Types of Annuities and Their Benefits
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Annuities are considered to be very secure investments that can offer a guaranteed return on your original outlay. This is why they are typically used in conjunction with pensions and retirement plans. One of the many benefits of annuities includes the fact that you do not have to pay any taxes until you finally withdraw the annuity or start receiving an annuity income. This can be a very cost effective tax free way to save money for your retirement.
Types of Annuities
There are a number of different annuities available and these are broadly classed in two main categories; immediate and deferred. With an immediate annuity the payments can be specified for a lifetime (or just a certain agreed number of years) and the payments would start immediately. With a deferred annuity the payments would be held over until a specified date such as retirement. This is more beneficial in many ways as it will allow the money to grow in a tax-deferred environment. This could then be withdrawn as a lump sum or in smaller instalments at a later date.
Fixed Annuities
If you want to ensure you have a very secure and guaranteed investment for your future then you could select fixed annuities. These are guaranteed to repay the principal amount invested plus an agreed amount of interest on top. There are two main types of fixed annuities which are equity-indexed annuities and market-value-adjusted annuities. With equity-indexed annuities a minimum rate of interest is paid (which is based on a specific stock index). A market-value-adjusted annuity offers a variety of interest rates and guarantee periods to choose from and you will also be able to end the annuity early if you need to (before the end of its tenure).
Flexible Annuities
Like any financial market annuities are constantly changing and you could benefit from this by taking more of a risk and opting for flexible annuities. These will allow you much more choice when it comes to investing your pension fund. There are several options with flexible annuities. You could purchase temporary annuities which are payable for a five year period only (available up to the age of 85 years). These cost less than lifetime annuities and this means you will only have to use part of your fund. This then leaves the rest free for other types of investments.
Special Situation Annuity
If you suffer from poor health then you could opt for a special situation annuity. These are designed for those who may reasonably expect to have a shorter life expectancy due to ill health. These annuities may be subject to providing full medical records or undergoing a medical exam. They offer the opportunity to receive an income for life or you could opt for your spouse to receive an income for their life upon your death instead. |
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Author Resource:-
Getting the right help for choosing annuities is an important financial decision and could make all the different to your retirement plans. Make sure you get the help you need by using an independent annuity advisor service.hostgator promo codes
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By :
Gareth Hoyle
Submitted
2012-03-22 23:53:21 |
Article From Article Mayhem
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